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All In: Devon Energy is Banking on a Rebound for Anadarko03/08/2022
Devon Energy Corp. intends to take advantage of its position in the Anadarko Basin to drive its cash return model. The company also intends to position itself as the leader for ESG within the industry.
The reason behind this move is simple: top management at Devon believes that the Anadarko Basin is a hidden treasure.
The number of rigs has increased by 180%, and production per rig is up. Technological advancements, longer laterals, and optimized completions are driving this trend. As the company has been in Anadarko all along, Devon will continue planning for the 300,000 net acres that they currently have within this basin, while others only becoming familiar with it at the moment.
Devon is implementing its cash return model when it comes to developing Anadarko Basin, which includes five key components — moderate growth, reduced investment rates, low leverage, fixed-plus-variable dividends, and ESG excellence, which generated $550 million in free cash flow by itself in 2021 alone.
Consequently, the Oklahoma City-based independent E&P company plans to drill 45 new wells in the Midcontinent by 2022, as well as to produce 600,000 boe/d across five operating basins, including the Eagle Ford Shale, Permian, Powder River, and Williston basins.
According to Aaron Ketter, a vice president at Devon Energy, Devon's approach to technology development is long-term. It is based on a consistent allocation of capital. These policies have been in place for decades. Data access, standardization, and trust form the foundations of this system. In line with this, technology teams and field teams, as well as vendor teams, are continually seeking net-zero improvement. Right now, that means using three different sensors to monitor emissions continuously — fixed cameras, a long-range laser network, and aerial laser surveys — to catch any harmful carbon or methane emissions.
Technology advances are bringing about a step change in the transition to observed emissions reporting. Devon will also work with agencies and NGOs in this regard, to conduct research and provide external reports. A preventative phase, methane fees, and carbon tax ensure the company does not become compliant, that any leaks are discovered as soon as possible, that they are fixed quickly, and that compliance is avoided.
However, it remains to be seen whether or not this strategy will produce the necessary results. We should note, however, that Devon Energy, Corp. (DVN) shares have surged 30.7% just this year alone amid recent macro uncertainties and rising energy prices. On both the topline and bottomline, Devon's recent fourth-quarter results were better than Street estimates.
Revenue increased by 233.8% to $4.27 billion, exceeding estimates by $1.04 billion. Earnings per share of $1.39 exceeded consensus by $0.15. Production growth in the Delaware basin and an increase in margins drove this performance. As of the end of the quarter, the company's total production averaged 611 thousand oil-equivalent barrels (Boe) per day.
It appears that they are doing something right, at least for the moment.
And as always, if you wish to learn more about basin development or glimpse some insights about net-zero production, contact our Houston sales office or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data for your business.
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The two Bakken shale producers announced in a joint statement on March 7 that they had reached an agreement to unite in a $6 billion "merger of equals." Combining these two companies will create a leading Williston Basin position with assets covering approximately 972,000 net acres, production of 167,800 boe/d, and an enhanced free cash flow generation that will generate capital returns to shareholders. A historic collapse in oil prices prompted both Whiting and Oasis oil companies to file for Chapter 11 bankruptcy protection in 2020. Thus, the merger can be viewed as a preventive measure to avoid going out of business.
By purchasing the gathering and processing assets of Trace Midstream, Williams' existing footprint gains expanded capacity in one of the nation's largest growth basins, bringing its Haynesville gathering capacity to over 4 Bcf/d — increasing more than 200% from 1.8 Bcf/d. The deal also includes a long-term commitment from Trace and Quantum to support Williams' Louisiana Energy Gateway project (LEG), which is aimed to deliver responsibly sourced Haynesville’s naturalgas to markets along the Texas and Louisiana GulfCoast
Shareholder’s payout target was increased by 50% after the largest U.S. independent oil producer surpassed Wall Street’s earnings estimates on growing energy prices, said Houston-based Conoco Phillips Co. on Aug. 4. Due to Western sanctions on major producer Russia throttling energy supply amid a rebound in demand from pandemic lows, oil and gas #prices have soared. Crude has been trading more than 25% higher since the start of the year and results also benefited from high natural gas prices. Meanwhile, shares were down a fraction, to $91.03, in early trading but are up about 26% year to date. Conoco Phillips stated, that the average price obtained for a barrel of oil and gas accelerated 77% from a year earlier to $88.57. The company acknowledges that it has not hedged any of its oil and gas sales to make the most of higher market prices. The capacity of 1.69 million boe/d was in line with Wall Street estimates, however, the company expected the current quarter’s output would be between 1.71 million and 1.76 million boe/d.
California oil joint venture, Aera Energy, of Exxon Mobil Corp. and ShellPlc is being sold to German asset manager IKAV, according to the agreement of Sept. 1. Shell noted that the sale of its 51.8% membership interest in Aera Energy is for a total consideration of about $2 billion in cash with additional contingent payments based on future oil prices, subject to regulatory approval. However, the total transaction value was not disclosed. Being one of California’s largest oil and gas producers, Aera Energy accounts for nearly 25% of the state’s production. The sale by Exxon Mobil and Shell ends a 25-year-long partnership in California, meanwhile, it persists a streak of divestments of mature oil and gas properties by the two supermajors. Aera Energy LLC operates about 13,000 wells in the San Joaquin Valley in California, producing oil and associated gas. In 2021, Aera took out about 95,000 boe/d. Exxon Mobil’s interests in the Aera oil-production operation in California contained a 48.2% share of Aera Energy LLC and a 50% share of Aera Energy Services Co. held by Mobil California Exploration & Producing Co. Moreover, Exxon Mobil affiliates have signed a separate agreement for the sale of an associated loading facility and pipeline system. The sale effectively ends Shell’s upstream position in California. The company reported that the divestiture is valued to result in a post-tax impairment of $300 million to $400 million, subject to adjustments.
The completion of the merger between Centennial Resource Development Inc. and Colgate Energy Partners II LLC happened on Sept. 1, sealing the debut of Permian Resources Corp., which is considered the largest pure-play E&P company in the Delaware Basin. Permian Resources’ idea was to combine two successful E&P companies, creating a better, stronger, and more strategically compelling company. Centennial and Colgate announced an agreement to merge in May, denying rumors that Colgate, a privately held independent Midland-based company, had been seeking an IPO. The merger estimated Colgate at about $3.9 billion and consists of 269.3 million shares of Centennial stock, $525 million of cash, and the assumption of approximately $1.4 billion of Colgate’s outstanding net debt. Permian Resources, being the combined company, has a deep inventory of “high-quality” drilling locations on around 180,000 net acres the companies anticipate will provide more than $1 billion of free cash flow in 2023 at current strip prices, in accordance with the company release on Sept. 1.